It finds some firms failing to provide suitability reviews
The Financial Conduct Authority (FCA) is calling on financial advice firms to address gaps in service delivery after a review revealed that some – albeit a small proportion of – firms are not meeting their obligations to provide suitability reviews as part of ongoing advice services.
The regulator examined data from 22 of the largest financial advice firms, focusing on the provision of suitability reviews, which are typically included in ongoing advice services. These services may also cover arranging transactions and managing relationships with discretionary investment managers.
It found that firms delivered suitability reviews in approximately 83% of cases. In 15% of cases, clients either declined the review or did not respond to the offer. However, in fewer than 2% of cases, firms admitted making no attempt to provide the reviews they had promised.
The FCA is urging all advice firms to assess whether they are meeting their regulatory obligations and contractual commitments. Where firms fall short, the regulator expects them to take corrective action.
“Ongoing financial advice and support can be a fantastic service and can be important in helping people make the most of their money,” said Simon Walls, interim executive director of markets at the Financial Conduct Authority. “Relationships between advisers and customers can last many years and can take different forms.
“In the vast majority of the cases we looked at, firms delivered ongoing advice for their customers. But, in a small number of cases, they haven’t attempted to provide the services they offered and customers are paying for. In those instances, they will need to put that right.”
Walls added that the FCA would review rules on ongoing advice to make sure they remain fit for the future and help as many people as possible to get good support in managing their financial lives. The rules governing ongoing advice services were introduced more than 10 years ago. Since then, consumer expectations, technology, and market practices have evolved.
Consumers who believe they have not received contracted services are also encouraged by the regulator to raise complaints with their adviser or the Financial Ombudsman Service, noting that there is no need for consumers to use claims management companies for this process.
The FCA also highlighted its broader efforts to support the development of the financial advice market, including initiatives under the Advice Guidance Boundary Review, aimed at improving consumer access to financial support.
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